okay, the european market, weaker for them in the rebound in asian shares and also looks as if the u.s. shares are also to the down side after a quick bounce after the better than expected new home sales data. of course today is a red letter day. we have been talking all day about the legacy that senator ted kennedy will leave, especially in the middle of the

health care debate, and he devoted his whole life, didn't he, to push through health care reforms. >> we just learned he's going to be buried at the national cemetery in arlington, virginia. i myself -- you know, i think he lived a full life. i don't think he's going to be an influence on health care debate, because i imagine health care is in big trouble. >> i'm mandy drury, thanks for joining us. >> i'm larry kudlow see you tonight on "the kudlow report." "power lunch" is up next. final numbers from the cash for clunkers program show nearly 700,000 sales were made with dealers submitting nearly $2.9 billion in rebate applications. the national hurricane center says tropical storm danny has formed east of the bahamas and is expected to strengthen into a hurricane later this week. new home sales rose more than forecast in the fourth straight months in increases. that's cnbc.com news now. first in business news worldwide. i'm courtney reagan.

let's see how perceptive you are over the next two hours and see if you can tell which of the three of us is going on vacation right after the show today. >> it's not me. i was just on vacation. >> it might be clear as the two hours unfolds. welcome to "power lunch" i'm bill griffith. stocks have been fighting to hold on to gains here. the dow struggling to go for a lucky seven in a row. consumer staples have been among the best performers today. we also have results of the $39 billion in five-year notes that are being auctioned off by the treasury. that will be next hour. could be a real market mover. . >> and i'm sue herrera. believe it or not since tuesday, the best six month raly or stocks since 1993. michelle and i are a little uncomfortable with that year. two top technical analysts tell us what the chart is telling them. >> and i'm michelle cabrusso-cabrera. first we had cash for clunkers and now cash for cribs. we'll tell you about toys r us

stimulus plan. and why the cup cake is the sweet bottom downturn. here's what else is on the "power lunch" menu. >> if you want to look at the legacy of ted kennedy's work, look at who is the president of the united states right now. the question is whether president obama can now achieve his shared goal with ted kennedy for comprehensive health reform. >> i'm diana olick in washington. sales of homes beat streets yet again in july, and an interesting divide in what's selling and what's not. >> i'm rebecca jarvis at a brand-new whole foods in manhattan. we'll take a look at how the company is clobbering the competition, even amid controversy. >> all right. let's get to the market action. stocks are struggling in a volatile session. home builders and telecom among the winners at the moment. part of that is because of you just heard from diana. bob pisani kicks it off at the new york stock exchange, one hour away from one of these crucial auctions, bob.

>> yep. and down -- up, then down again. so make up your mind, folks, the new home sales number moved the around up around 10:00 eastern time, but we have drifted lower. the big home builders up 2, 3, 4% on the day. important thing is highs for the year, and lennar, posting pre-lehman levels back in september for these stocks. take a look at the industrials, led lower primarily by tech and industrial stocks, most to the up side. but these names have had a great run in the last couple weeks, but they have been taking profits here today, not dramatically, though. 1, 2 or 3%. how about the discounters? they had a great run. we've gotten good numbers. big lots had a great report the other day. dollar tree had a great report here today. fred's has been riding coat tails for a while, but all of the numbers have been strong today. we had techs move up on new home sales, but since then drifting lower. >> absolutely object bob. we have been moving to the down side by about 8 points, just shy

a half percent. widely held techs to the down side. of yahoo, google, apple and cisco down a little bit. and picking up what bob was talking about, it's the consumer addition creationnary names, like bed bath and beyond, 3%, children's place almost 1%, costco is showing a fractional move to the up side and from the restaurant space, buffalo wild wings is up 5% on an upgrade over at lamont. also watching the biotech stocks, because a couple have interesting stories today, and they are on the move and sharply higher. myriad is up 16%, upgraded. human genome up on takeover chatter. a lot of options activity around those shares today. and let me quickly point out, expedia is just a fractional move to the up side, but that stock at 22.88 at a new 52-week high. brian shactman. >> don't forget, it's storm season and not a lot to pock about, because there hasn't been much, but i want to introduce you to tropical storm danny, it

is in existence now. take a look at the intraday chart. a little bit of a bounce off those inventory numbers, but still in the negative territory, so i wouldn't call it a rally. we had a build of 128,000 barrels. most estimates were drop down of more than a million. but we did build the a.p.i. number, but landed in the middle, so almost a neutral impact. let's look inside the numbers. demand pretty much down across the board. gas, approximate 3/10 of a percent, distill at demand down 8/10, and gold right now slightly lower, although not by as much as you might think. back to you. >> thank you very much, brian. as far as the dow jones industrial average is concerned, it is up more than 45% since the march lows. will that continue? and will it be fueled by a variety of factors, or anything specific? let's talk about that with our power lunch task force. joining us is craig steel of

apex wells management and ryan battle of performance trust capital partners. request to have you here, guys. appreciate it. craig, i'll start with you if i could. certainly an impressive performance, but you're worried about some of the head winds, namely the deficit figures we have. tell us why you're concerned an what you're doing in light of  that. >> thank you. one of the big concerns that we've discussed over the last few days in the news is the  deficit. the federal budget will be looked at again for the new '09 to '10 fiscal year beginning in october. and there's the risk that the deficit's even higher than what we're currently stating. another big headwind, though, that really hasn't hit the news that much yet is resets for a different kind of mortgage. we have already gone through the subprime mortgage crisis. but the higher-end home buyers did a lot more creative financing, three to five years ago. we had all paper and option arm paper. these are mortgages that allowed people to buy houses sometimes

more than they could afford on a conventional basis, and a lot of those are about to reset. and in many cases -- >> are you saying, craig, we're heading toward a double dip in the economy here? is that what you're getting at? >> that's a possibility. and with the affluent homeowner having less money to spend because their mortgage payment could go up by 50 to 80%, we think that could have a strong impact, along with the possibility of higher taxes down the road. >> brian, does all that worry you, or is that just part of the wall of worry that the market always needs to climb. >> yeah, the market climbs on a wall of worry. but this time it's different -- >> oh, i hate that phrase. don't say new paradigm. >> it's always different. this isn't like the depression, the oil recession, isn't like the dot-com bust, different every time. so this is a big wave, 9, 10, a little 11. but some of those guys might have been foreclosed so that wave might be smaller than we think. but the thing that worries me about the stock market is where is the growth going to come from? we prevented armageddon, there

is a lot of government stimulus in the system, and a lot of government holding interest rates down. >> so you think the relief rally from the botses is over, and now we need to see growth to continue this. is that what you're getting at? >> sure. two things. juan, you mentioned the defy the sit, how much gdp that we have compared to how much debt that we have. that's ratio is getting out of balance, heading to 20%. so you can't borrow and spend your way into recovery. you can't jump start an economy like a dead battery. so what we need is organic growth, consumer spending. business formation. you know, taxes going lower so the pie can get bigger. temporally, in the very short term, the economy could look like it's growing until the first quarter of '10 or the second quarter of '10 with hundreds of billions of stimulus that has been allocated but not specialty yet. so i could be wrong in the short term, but we need to see real growth in especially business formation. >> we were struck by the

percentage in advance the dow jones industrial has made. but the comparison is similar to what we saw in 1933. does that comparison worry you at all? >> it is a worry. and we have had had nice growth, but as a result, also looking at corporate bonds as having good values, especially high yield, and also triple b and single a. we think there is some good values there. and so for our portfolios, we're definitely balancing stock purchases with bonds. we're alsoering on the side of caution for new investments, recommending dollar cost averaging. >> how do you think the auction is going to go next hour, brian? >> it's a $39 billion auction, it's going to set up real well. the two-year went fine yesterday, wire in the part of the curve where there is a lot of slopes. you can sell twos and buy on 140 basis points. and more importantly, ben bernanke was given the wave in. so that's settled. i think the treasury and the bond market will feel better that's going to be consistents. we're not going to get somebody else we don't know. so should be setting up for an okay auction today.

>> all right. thank you, guys. craig, nice to see you. ryan, thanks. >> thank you. at this point, the tributes are pouring in for ted kennedy. of what will the passing of this powerful, widely respected senator mean for the president's agenda this fall, especially, of course, as it pertains to health care? we'll talk about that, coming up. >> also this hour, a lot of talk about a market correction after this summer rally, programs. we'll find out, though, what the technical analysts are seeing ahead. plus, stretching the stimulus dollar. is obama's infrastructure plan working programs better than we think? >> and get ready for the "fast money" halftime report. rick santelli is in the house. he's in the chair with the gang. "power lunch" is back in two minutes. [ engine revving ] [ engine powers down ]

gentlemen, you booked your hotels on orbitz. well, the price went down, so you're all getting a check thanks. for the difference. except for you -- you didn't book with orbitz, so you're not getting a check. well, i think we've all learned a valuable lesson today. good day, gentlemen. thanks a lot. thank you. introducing hotel price assurance, where if another orbitz customer books the same hotel for less, we send you a check for the difference, automatically. (announcer) we understand. you need to save money.

i'm looking forward to being a foot soldier in this undertaking, and this time we will not fail. thank you very much. >> the liberal lion is gone. ted kennedy, the third longest-serving senator in history passed away last night as you know at the age of 77. spent nearly half a century in the halls of congress, fighting for health care, for civil rights and for the american working class. our chief washington

correspondent john harwood joins us now with the fallout of senator kennedy's death. john? >> you know, bill, politics is about laws and policies. it's also about people. and we've heard both sides in remembrances of ted kennedy today, from vice president joe biden, and also from president barack obama on his vacation at martha's vineyard making the point that kennedy's long-standing crusade for civil rights had a profound impact on his own life. take a listen. >> the outpouring of love, gratitude and fond memories to which we have all bourne witness is a testament to the way this single figure in american history touched so many lives. his ideas and ideals are stamped on scores of laws and reflected in millions of lives. and seniors who know new dignity and families that know new opportunity, in if children who know education's promise, and in all who can pursue their dream in an america that is more equal and more just.

including myself. . >> now, of course, what everybody is going to be watching from here on out is whether or not the long-standing goal, which kennedy called the cause of his life for universal health care reform is going to be achieved. and on this point, i agree with larry kudlow that his death is not likely to have a major impact on the debate, but i disagree with larry in this respect. i think the democrats are likely to get the votes to pass something approximating barack obama's health care objectives by the end of the year. so i think that health care effort is in better shape than some people now think in washington, guys. >> as a result of ted kennedy's death, john? >> no. >> in the same way when we saw, for example, civil rights legislation stuck and then unfortunately after the assassination of jfk, that moved more quickly through congress? >> i don't see it in the same way, michelle. i don't think this has the shock that, of course, the kennedy assassination had. people have been watching ted kennedy's struggle with his illness for some time now, and we've known that that -- his absence is a part of the equation.

no, i think democrats, when they went into the break, had the votes in the house to pass what had come out of the house committees. of they're going to have the votes, in my view, in the senate to pass something that is less ambitious than what the house has passed, but still will get the conference, and i think they're going to get a product that may not have a public option, may have cooperatives instead of that. but will achieve many of barack obama's goals and he could call a victory by the end of the year. >> but i think you would agree, john, the lack of a champion in congress on this issue, that ted kennedy would normally have played, had he been well, has hurt the president's chances of getting really what he's after in in terms of health care reform. >> well, certainly, that's possible. and i think one role that ted kennedy might have played that somebody else is going to have to play if anybody can, and that is once the compromises get made in the senate, and then between the senate and the house, democrats, i believe, will have a challenge keeping their liberal base together, because they're going to look at those compromises and say, hey, wait a minute, that's not all we wanted

to -- >> we were talking about that this morning. is that chris dodd, or who is it that will carry the torch -- the ted kennedy torch here? >> i think the name of that person is barack obama. and i think when president obama as the leader of the democratic party steps forward and makes the case to liberals, yes, you have to accept the compromises we've made, i believe they'll respond to that. >> so who takes over the health committee, john, at this point? >> chris dodd is in line to do that. but i'm not sure that he wants to give up the banking committee. >> doesn't to leave banking? >> i would think he would not want to leave banking, especially if he is facinging a very, very difficult re-election campaign. we know that the banking committee also has very important work in regulatory reform for wall street. that is also a very good committee for raising campaign funds, i would point out. so i'm not sure that chris dodd is going to move. we'll see how that shakes out. >> yeah, my cynical question, john is who donates more money, the hedge funds in the financial

industry or the health care industry? >> boy, i think six to one, half dozen to the other, but chris dodd is in place -- has a good working relationship with richard shelby of alabama on the banking committee. so i bet at this stage that he would stay there, but we'll see. >> all right, john, thanks.@ see you later. by the way, as you may have heard by now, senator kennedy will be buried at arlington national, no doubt near his brothers there. >> all right. we'll take a quick break. and when we come back, the art of the chart. lots of talk about a big market correction in the wings from some people, but what do the technicals say? technical analysis. is it telling us we're due for a correction or there is more room to go on the up side? times to read the tea leaves. >> and later on, the stock of whole foods up more than 200% this year. you heard right. 200%. how are they doing that in a downturn? and we're going to have a dissident director who doesn't like the ceo. >> wants him out. >> big performance. we'll talk to him, as well. cnbc, first in business worldwide.

tdd#: 1-800-345-2550 if i'm breathing, i'm thinking about trading. tdd#: 1-800-345-2550 i always have my eye out for a stock on the move. tdd#: 1-800-345-2550 doesn't matter if a company sells computer chips tdd#: 1-800-345-2550 or, i don't know, fish and chips. tdd#: 1-800-345-2550 i'll look at all kinds of stocks before i settle on one. tdd#: 1-800-345-2550 if i think i'm onto something i'll check it out, tdd#: 1-800-345-2550 you know, see what other traders are up to. tdd#: 1-800-345-2550 when everything feels right though, tdd#: 1-800-345-2550 that's when i get serious. tdd#: 1-800-345-2550 and the minute i get into something, tdd#: 1-800-345-2550 i already know when i want to get out. tdd#: 1-800-345-2550 of course, every now and then i'll talk with somebody tdd#: 1-800-345-2550 who knows what i'm trying to do. tdd#: 1-800-345-2550 (announcer) switch to schwab today. tdd#: 1-800-345-2550 you'll get the tools, the technology tdd#: 1-800-345-2550 and the support to trade your way. tdd#: 1-800-345-2550 go to schwab.com/trader tdd#: 1-800-345-2550 or call 1-800-540-7304 tdd#: 1-800-345-2550 right now. tdd#: 1-800-345-2550 but opportunities can vanish like that... tdd#: 1-800-345-2550 ...so most days, i'm right there tdd#: 1-800-345-2550 when the market opens.

whento compliment theirflac benefits package aflac! it made a big splash with the employees yeaaaahhhh! find out more at aflac!... ...forbusiness.com (laughter)

♪ yes, you're lovely... ♪ what do you think? hey, why don't we use our points from chase sapphire and take a break? we can't. sure, we can. the points don't expire... ♪ there is nothing for me... ♪ there's no travel restrictions... we could leave tomorrow. we can't use them for a vacation. you can use the points for just about anything. i know... ♪ the way you look tonight ♪ chase what matters. get your new chase sapphire card at chase.com/sapphire. all right. let's check the markets. the dow is in the green, not by much, but good enough. up 6 points at 9548. the nasdaq just slightly in

negative territory, and the s&p has just ticked positive on the day. some of the most widely clicked stocks on cnbc.com, caterpillar, jpmorgan, coca-cola, exxon and the u.s. natural gas fund, etf. bill, over to you. >> okay. we want to look at the smart money right now. look at the charts. measure, market psychology, the supply and demand, we've had a jump in home sales and factory orders, not enough to keep stocks afloat this afternoon so far amid lingering fears we're maybe due for this correction, as has been talked about ad nause nauseam. so what are some of top wall street chart readers making of this market right now? in today's smart money, our friend phil roth, chief technical analyst, and bill, chief market strategist at bell curve trading. nice to see you both. thank you for joining us. phil, we start with your chart, the s&p 500 going back a year here. for you, the run may not be over, but we need some consolidation and you see a support level around 980 on the

s&p, yes? >> that's the first minor support level you can't even say we're in a correction until we take that out. i think the reason the market has done better than the forecasters would say, people have been talking about a correction ever since the rally started. there's not a lot of resistance between 1000 and 1200. so to try to pick a top is kind of foolish. >> we have had such a run from the march 9th lows to where we are today. why wouldn't we need a much bigger correction, as some people feel? >> we don't need a correction. the market had a big rally, because it had a big decline. i think people forget just how oversold the market was. of we have had big rallies like this from very oversold conditions in the past. and it really doesn't tell you about how long it's going to last. it just told us that we were very oversold. >> so we could -- longer-term, though, you see us going higher here. >> i think the -- i think secular trend is not up. so we're in the midst of some wide swinging markets. the fall would be the period

when i would expect the opportunity for a bigger correction. take out 980, then i think there is probably 10% down side risk. >> bill, you get this xli, this spdr that trades industrial stocks right here. what do you see? we've had a pretty good run here, it's very similar, of course, to the s&p chart. >> yeah, bill. the bottom line here is we still think the market has more to go on the up side and the s&p, at least 1100, 1150. so you might want to look at areas where you might outperform the broader market. and i think the xli is an opportunity to do that. on this next leg. so the story here is, we have been in a range from 20 to 25 24, and now it looks like we're transitioning to a range from -- to 24 to 28, maybe even 29. so i think you could see another 10 to 15% here on the upside. so this is one -- the techs that we're looking at for relative performance. because we do believe there is more to go on the up side, and we want to try to play it in

areas where we can outperform the broader mark. >> okay. now let's look at a couple individual stocks, widely held issues. differing opinions on, guys. phil, exxonmobil. you think there's still more to come here for this company. >> well, the reason i suggested we look at this chart is that the energy sector is a group that did not retrace its holdable market during the bear market, so the long term trend is intact and been building over the course of the last six to nine months. so i think it's telling us that the intact sectors are largely resource sectors, and the associated industrials and transports. and this is the blue chip example in that area. >> target price? do you have one? $71 right now. >> well, i don't -- i'm not suggesting that has a huge move in a short term. i think it will be a leading stock in the next cyclical market, conservative stocks, not very volatile. so you take it sort of 10% at a time.

>> okay. you're looking at citigroup here, and you're a little concerned about the run it's had since it's march lows. >> yeah, bill, that's right. if you look at the bottom they're on, back in march, i went back and i looked at, you know, where was most of the trading volume accumulated off the march lows, comes in around 3. so you had to move from 1 to 3. and that projected a move on the upside to 5, which we just hit the other day. so when i look at this critical trend off the march lows, which is really the important trend to follow in just about all the markets, it says to me that, you know, citi hit a major objective when it topped out recently around 5. i would be a profit taker, because i think you could get at least a buck pull back. >> bill, can i ask a question? if indeed we have more to go and you don't expect a pullback until november or december, but big-picture, very long term, is this move we have seen, this 45% rally off of the lows within a secular bear market, in your work? >> well, for the s&p 500, i

think it could argue that it's the -- the secular trend is down. we don't have to say down, though. it's not up. it might be sideways. >> right. >> there's a lot of room to whittle between the recent lows, 667, and the highs, which are above 1400. so if it's not -- it's not important what to call that trend. i think it's a big neutral trend, the third one in the last 100 years, and we're going to be in this -- in this range for a number of years, maybe another 10. >> ten years! >> get ready for it, i guess. >> okey-dokey. >> thanks, guys. thank you both. the fed's lockhart making statements which perhaps you saw on the bottom of our screen saying that basically we have recovering credit markets that have been aiding the economic rebound, and in addition to that, the gdp should soon return to positive, but subdued growth. he also mentioned that we are seeing more money flow into distressed assets, and

distressed parts of the credit market, but there is more room to go on that particular probt and that there may be a protracted period of high unemployment. >> so coming up, we've got reports today that taxpayers are getting their money's worth. supposedly from the stimulus package. low prices mean the same money is paying for hundreds of extra roads and bridges. so is the stim a bargain? that's our "power grid" debate coming many up. >> and coming up, the "fast money" halftime report. rick, what are you watching? >> today, of course, the bulls just can't seem to hold on. they are trying. we're fighting for unchanged territory. hey, the data was pretty good. is the fed going to end up making a difference? is this the end of the rally? hey, oil falling to $70, key reversal yesterday. we have your best trade in this space. make sure you tune in to the halftime report in 15 minutes.

welcome back to "power lunch." in the headlines at this hour, stocks are trying to hang on in a volatile session. the dow is slightly positive, trying to go for seven straight sessions of gains. mcdonald's, home depot, verizon among the winners now.

williams sonoma posting a surprise profit in the second quarter, thanks to cost cutting, the company also raising sales outlook for the next year. and general et cetera i cans up 7%, the company makes cancer diagnostic tests, it did get upgraded to a buy. president obama's stimulus plan working better than expected in the construction industry, that according to the front page of "usa today," titled building slump stretches stimulus, with a lot of road work coming in below budget, because of the recession, construction costs are lower than budgeted. is the stimulus turning outs to be a bargain? julie riginski and greg knapp. you know how to works. the softball to you, julie. is this working? >> well, yes, it is working. look, the stimulus has put a lot more people to work than would have been at work, had we not had the stimulus, including police officers, including

teachers who have been able to keep their jobs, and also including a lot of people in the construction industry who now thanks to stimulus have worked where otherwise couldn't have been. it's a bargain, a great idea and i'm glad the president pushed it through. >> she did it with 3 seconds to spare, greg. why isn't this a bargain? >> the stemlous spending is like economic crack. much makes you feel high, but it's not a real high, and has long, negative consequences in the future. christina romer, obama's own economic advisor did a report that said in the era of big government spending, you have deeper recessions than longer recessions, and history shows both in america and around the world, more government spending in the economy means deeper recessions and longer recessions. >> yes, but also did another piece, julie, where she basically the economies turned around by the time the fiscal stimulus gets into the system is actually monetary stimulus that actually makes the economy better. >> look, i'm not sure about the christina romer report that greg is referring to, but i will say this. it is an unquestionable fact that there are people at work today, and a lot of people at

work today who are working because of the stimulus program. that's indisputable. what that means is that for those families, and those families are in the thousands, they have livelihood, the government has tax receipts it otherwise would not have had. it's a boon to the families. a lot of these people would have been collecting unemployment benefits had it not been for the stimulus. it's good, public policy. >> but the problem here, julie, the vast majority of the jobs that have been, quote, saved, are government jobs, and that's you and me paying for it. and we don't know what would have happened if we cut capital gains taxes to zero, cut business taxes from 25% to 30%, cut taxes across the board to allow income and capital to flow in and build a real economy, because we're building a bubble money economy right now. >> craig, we know what would have happened. >> no, we don't. >> actually, we do. what would have happened with the tax cuts we saw in the initial stimulus is people saved them. they didn't send them. >> that's because it's the wrong kind of tax cuts. julie, you're not listen to go

what i'm talking about. those are not the tax cuts i'm talking about. >> greg, it's not totally different. you're talking about cutting the capital gains taxes to zero? >> julie? >> where would the government -- you keep talking about the government deficit. of. >> julie, the last time we cut capital gains taxes, we had an increase. >> greg, we cut all sorts of taxes under george bush -- >> it worked. >> it worked? >> the taxes went up by double digits. >> julie, when you look at cash for clunkers and what's been happening in home sales and everybody talks about the $8,000 tax credit for first time home buyers -- >> i don't agree -- hold on, greg. i don't agree with subsidizing the industry, but what those two programs show is that when you give the consumer the power through tax cuts and tax credits, what happens? they really do use it. >> the cash for clunkers program, if you look at edmon edmonds.com, it moves some people purchase forward, some back. >> it's an irrelevant point.

no. >> because it goes to the future of what's going to happen when this economic crack comes crashing down. >> greg -- >> the point is only that when you give individuals choice, they will use it, and it will far more effective than waiting for government money to come around. >> i'm not saying government money. i'm with you on that. but of course people are going to take free money, but it will have to be paid sometime. look at the deficits, look at the debt and what's going to happen. >> greg -- >> we're building this fake money economy here. >> your argument makes zero sense, because if you're concerned about the deficit and you're concerned about the fact that we're going to have tax -- you know, you keep talking about the deficit and how this stimulus is contributing to the deficit. >> right. >> guess what? you to cut taxes, where are the government receipts going to come from? >> let me answer. if it you're going to ask a question, you better let me answer. if if you look at the bush -- when the bush tax cuts were fully phased in in '03, tax revenues increased by double digits. it was the spending that was a problem. >> george, blessed us with a $1.3 trillion deficit, my friends. >> and now we have doubled it. >> thank you. see you later. >> thanks, guys. >> up next --

>> funny how a republican makes his point. >> i know. you're trying to help him out, and -- what can you say? all right. so that new track tax credit for houses, well, new home sales jumped almost 10% in july. really beating expectations. so we have to ask the question again. has housing actually turned the corner? >> top of the hour, another big bond auction. this time $39 billion of five-year notes on the block could move the markets. we'll have that for you at the top of the hour. we're back after this. i'm here on this tiny little plane, and guess what... i've still got room for the internet. with my new netbook from at&t. with its built-in 3g network, it's fast and small, so it goes places other laptops can't. anything before takeoff mr. kurtis? prime rib, medium rare. i'm bill kurtis, and i've got plenty of room for the internet. and the nation's fastest 3g network. (announcer) sign up today and get a netbook for $199.99 after mail-in rebate. with built-in access to the nation's fastest 3g network. only from at&t.

among the stocks hilting a new 52-week high, bed bath and beyond at $31.87, and you can see it has been up about 25% so far year-to-date. >> more positive signs of a recovery in housing market. diana olick joins us from washington with the details on that. hey, diana. >> that's right. hey, sue. new home sales rose for the fourth straight month, beating expectations by a lot yet again in july. and on top of that, that 9.6% gain, the june jump was actually revised up. it's all good signs. and here's another. take a look at inventories. new construction inventories fell to a 7.5 month supply lowest since april of 2007 and well off the 12-month supply since past january. the number of newly built homes

on the market today. but take a look at exactly what is selling and you might get insight into today's buyer and builder. sales of homes that have not yet started construction, that is empty lots, rose 33% in july from the month before. sales of completed homes or spec homes fell 6%. some believe this shows more confidence that buyers are now will to go wait longer to close on homes, not fearing those homes will fall in value. it also shows builders are focusing on new orders, because their margins on spec homes are going to be much lower. now, just one more little data point, if you can take it. that is, the volume of new mortgage applications rose 7.5% last week, largely driven by re-fis, even though the 30-year fixed interest rate rose almost 10 basis points. for more, of course, you know where to go, to the blog, realtycheck.cnbc.com. sue? >> diana, one of the things our market analysts brought up a little earlier is the resets for certain types of loans that is starting now, and will probably

continue into the fall. and i know you talked about this a little bit. but is that a valid concern? are we going to see a wave of these resets hit the market once again, or have a lot of those homes already gone into foreclosure? >> we have seen most of the subprime resets go through the system default or delinquent or go into foreclosure. what we're looking at now are the pay option arms. these are the types of loans where you can decide to make a minimum payment on your interest and principle, and pack the rest of that on to the back of your loan. and what happens is, you reach a certain point where you get to either 10 or 15% of the principle that's been tacked on and that's the limit on these loans. and when that happens, you no longer have the option. you have to start paying the full balance. >> quick, because we're up against a break, are they set -- are a number of them going to reset this fall? >> were they are all starting to reset. this summer, this fall, and going into 2010, not expected to peak until the middle of 2010. >> thank you, diana. >> we are minutes away from that $39 billion auction in had

five-year notes. rick santelli at the top of the hour. shares of whole foods, an explosive rally up more than 200% this year. so this dissident director we're going to have on, why doesn't he like the ceo? >> we'll find out about that, but when we come back, the "fast money" halftime report with the very busy, rickster santelli. i hired him to speak. a lot of fortune 500 companies use him. but-- i'm your only employee. we're gonna start using fedex to ship globally-- that means billions of potential customers. we're gonna be huge. good morning! you know business is a lot like football... i just don't understand... i'm sorry dick butkus. (announcer) we understand. you want to grow internationally. fedex express

others by the car of their dreams. during the lexus golden opportunity sales event, you can do both. special lease offers now available on the 2009 es 350.

welcome to the "fast money" halftime report, getting to the heart of the action as it's

happening. i'm rick santelli in for melissa lee. trying to hold into positive territory, better than expected housing. you know, where is the money headed for the continuing to hang on? it's big question. >> well, the world is trying to hold on, this great housing number just goes to show that people's expectations are rising here, right? the s&p is obviously lost its ground since the morning, i said it on monday, it's going to be tough to hold this level and i can tell you, the options traders looking to the down side. starting to become more big, and what that means is people are looking for the down side. >> do you think there's more skew adjustment left? >> you know what? the 50-day moving average for the s&p is down around 950. that 75 points away from where we are and why that means something is so many people look at moving averages. i think there is still time. >> danny, what are your

thoughts? do you think we're going to see more? how do you proceed? >> well, it is a bit drowsy over the course of the week, and we're in the doldrums of august, but i think a lot of interest for buying protection here. sentiments have switched dramatically for something that's really, really negative to quite positive. and i think that that's why we're not really believing what we're seeing, as you said, before people's expectations much higher. housing numbers came in better than expected. we're still not seeing that bump in the market. that means we're hitting a ceiling. >> what i need to know today to make some money. >> yeah, well, our concern is there is complacency at this point, all of the polling we do and surveys, no one is concerned, all of a sudden, the bears are all gone. outright bullish, reluctantly bullish, wanting to buy dips bullish, but no one has flurd. of and that's a big concern. >> brian, what about the auctions today? it looks like it's had a wide

range but yield is a bit low. priced a bit high. anything there? >> you know, i don't think so. i think every week we're going to be looking at this at 1:00 in the afternoon to see what's going to happen. and again, someday perhaps you're going to be on the tube and say the auction failed or didn't go that rate. >> we've had moderate viewers, guy. next trade, housing better than expected. builders and consumer names definitely moving higher. brian, how are you playing these positive housing results, and can we keep playing them? >> i would say no. i don't mean to be the wet blanket on a cold day, but i don't think the housing numbers were that great. if you look at the number, plus or minus 13.4%. so we could conceivably actually be down today. >> didn't we shave off the month on inventories? isn't that something good? >> yeah, it is. yes, it is something. but if we're still off by 4%, you're going to put that month back on next month. >> and the home builders have

already priced higher, an aggressive move already. >> yeah. and look at lumber futures, too, that type of home building, home sales number, you see lumber futures limit up, and they're not today. >> danny? >> they're certainly not. >> yeah, they're not. and i think too we have seen so much action and talk about what's going to happen with this housing market, and don't forget, there is a lot of incentive for initial home buyers to buy until december. maybe next quarter we're not going to see the same kind of thing. so there is a lot of taking money off the table and buying protection here. >> the oil market has been exciting. 75 yesterday, 70 today. unexpected rise in stocks. crude oil looks like the technicals might start to win us over. we have our big guy, the oil trader, joe on the "fast money" line. hey, joe. seems like the trades we're talking about last night are working, under pressure. >> first of all, rick, how are you feeling? they treat you well last night? >> i'm rarg to go.

>> good, pal. on the oil story, yesterday was all about the technicals and the intraday reversal. got up to 75, we failed at 75. rick, that was a ten-month high. we pulled back. but here is the critical component. it's all about fundamentals right now. you had an inventory report today that didn't line up with a rather bearish report last night on the apis. go back to last week, you had had a significant drawdown. that's the day you want to focus on. last wednesday, when you had that significant drawdown, 68 bucks was the low. it holds above there. you still want to be a buyer of oil longer-term. >> jared, you buying this had argument, short oil or long premium? >> here's the problem. going into september, right, september big hurricane month, got to be a little bit of that volatility -- you know what i've >> good point. >> what i've been doing there is i've been selling, using out of the money cost spreads, a little bit most of advanced. but i'd be rather getting really short just because of that unknown factor. at least until september holds through.

>> the inventory nears year over year up quite substantially, so that is still an overhang. and the stuck at 75, doesn't look like we'll break out here. >> next trade 1:00 eastern. about it's my favorite part. we have an auction $39 billion five year note, i've been watching the wi. it's how it trades before it goes to the auction process. gets its coupon and like all markets, they trend together. the prices are moving up, the yield moving down. all right, carter, let's talk about this. >> our play here is we're going after munis. the spreads are still quite wide. and there's an etf you can go after, b.a.m. there are interesting ways to play the credit market here outside of let's say treasury which is we think are -- >> i like this muni bond chart. >> yeah, quite good. so they're showing the spread still not as wide as it was. the price has fallen, but very

wide still. >> do you have an inherent comfort with dabbling in some of he's mun i points? >> that's the opportunity. >> uned adjusted market which is where we make a living. options actions. another fun part of the show. what jared is looking at is, in the options that you've been talking to me about that let's talk about it with the viewers. >> a couple days ago, hgsi follow as huge buyer. yesterday they came for 4,000, 5,000 of them. today they're still buying them. there's an analyst out there stha said that this g lcht axo deal could get done sooner or later and we continue to see buyers

out there. it is risky and a lottery ticket. this stock was 50 cents back in march, but traders are still making bets it gets done at 30. >> thank, jared. time for fast and furious. let's go around the horn. should you buy it? >> it's unsexy. they're expecting a lot of four cents. the street is looking for five. >> we talked about it before. five year note, seven year notes on back tomorrow. should you buy? >> i'd much rather be a buyer of the dollar. i think you got better up side in the dollar make yourly something like uup is the up side dollar etf. >> dell reports tomorrow. it's turned into a bit of a darling. >> i think we stay with it. nice person. and basically an unpopular stock last couple years. >> american eagle reports tomorrow.

should we buy today? >> i would be a seller actually. probably like to stick with something more like a jcpenney instead. >> don't go anywhere. fast money halftime report continues right after this break. here's what we have coming up on the big show tonight. the market continues to defy just about everyone. but at some point, a correction will come. when the high wire act may end. and the trade before dell earnings tomorrow. plus great things come in pairs. and so do some of the best investments. it's wall street's odd couple trade on america's post market show tonight. [ engine revving ] [ engine powers down ] gentlemen, you booked your hotels on orbitz.

well, the price went down, so you're all getting a check thanks. for the difference. except for you -- you didn't book with orbitz, so you're not getting a check. well, i think we've all learned a valuable lesson today. good day, gentlemen. thanks a lot. thank you. introducing hotel price assurance, where if another orbitz customer books the same hotel for less, we send you a check for the difference, automatically.

and you know what, it works. nutrisystem for men: flexible new programs personalized to meet your goals. what's great about nutrisystem is you eat the foods you love and you lose weight. i'm dan marino. i lost 22 pounds on nutrisystem and i've kept it off for three years. for a limited time, get an extra three weeks of meals free! that's right, you can get an extra 21 breakfasts, lunches, dinners, desserts, and snacks. that's 105 meals free! i had awesome results. i mean, i lost 22 pounds, my goal was 20, it came off fast, and the food was great. it's what every guy's been waiting for: it's healthy weight loss and it's flexible. with prices as low as $12 a day, you'll save hundreds over other weight-loss programs. order now and get an extra three weeks of fantastic meals. that's right, 105 meals absolutely free.

call or click now. guys, you can do this. just pick up the phone and call. you will lose weight. welcome back to the fast money halftime report. time for you "power lunch" trade to go. jared, what are are you watching? >> it's another play on tech. everybody loves the tech sector.

it still could be a strong sector. i like marvel technologies. they've got their hands in a lot of different pots. they have a new testing out on the 11th. simple moving average for 50 days is around 13. you can go into tomorrow's earnings, which the report after the close, you can buy the stock today for about 14 and change, sell the september 15th call. you bring in 40 cents. it helps to offset your risk. and here's why. marvel tends to move about 10% over earnings. that's about $1.40. i think with the broad market, the stock has a larger data, it may drawdown if the market draws down. it will gef you the offset you you need. i like it, but i want to enter it with a slight protection with that short call. >> time to call the close. let's go around the horn. buying or selling?

>> i'm a seller here. >> i tend to agree with you. danny? >> i'm in agreement. i'm a seller, too. i'm taking money ocht table where i can. we'll probably come back in either later this week or next week in that. >> sell and down in a week. >> i guess it's up to brian. >> well, yesterday i was a contrarian, but i have to be a seller today. >> viewer, you see we're all a bit on the sell side. i'm not sure exactly what that means, that's it for the halftime report. don't miss tonight's show as i go head to head with bill over bernanke's reappointment. we'll work on the same thing you're going to work on, that auction. the breaking news that we expect at the top of the hour, the results of the $39 billion five year note. plus the controversy surrounding whole foods ceo and his recent op-ed on health care reform.

we talk to the head of an investment group who wants him out of there. and the queen has a lot of they thinks cooking. she'll join us live. we're back in just a moment. dennis lockhart says the economy is showing signs of recover rirks but may be facing a protracted period of high unemployment. stolen vials of insulin may still be on the market evidence shows it was not stored properly. holiday travel will be down this year. that's cnbc.com news now. #@ for a guyearing cowboy boot, santelli moves pretty fast getting ready for the auctions. welcome to the second hour of

"power lunch." the stock market is sharply unchanged at this hour. bulls and bears engaging in a tug of war today. >> waiting for the auction. >> yes, we are. you can tell who is heading on vacation after the program today? we'll have the results of the $39 billion in five year notes due just moments from now. >> and just a short while from now, bill, the fdic is scheduled to vote on rules making it easier for private equity firms to buy troubled banks. should those guidelines be softened? both sides of that issue. and speaking of private equity, we'll have the latest on the democratic fund-raiser facing bank fraud charges. >> so we have the auction. and we'll see what the traders were saying during the halftime report. lately the stock market has been very resilient even if we would have a tepid economic report.

today very strong reports on the economy, the new homes figure very strong, the did yourable goods report much better than expected. and we're sitting here with the dow down a point. heading toward labor day of course, but it's still a lackluster response to some pretty good data. >> a little bet of nervousness about the lack of bears out there. there are a lot of people who are saying there's much more to come. >> we heard that last hour that we could still see this market move higher. >> everybody seems bullish lately. and everybody tends to be wrong. >> it's really hard to find a bear out there. and as a result of that, i think people are getting a little skittish and you have these auctions, a lot of debt has to be unloaded. and it's the perfect time if you've got some money to take it off the table. rick, how does it look? >> it's really good.

249 is the yield. so you're right there. but the bid to cover it, 2 bpt 51. for a five year auction, we had another good 2.50 plus bid to cover last auction. but you have to go back quite a ways to get any higher in a 2.6 area. i'm not sure i know what to do with indirect bids anymore. is it dealer, do they come around to buy it. i'm going to have to give this one a b plus. i think it's a good auction. 39d billion 5 gone. tomorrow lucky seven year. >> how do you think that will go? >> i thought that would be the best one and i think that will prove to be correct. the seven year has been around long. it's not as liquid. it's a little thin. but definitely not the darling. >> interesting the dow hasn't responded. >> we're down three points. so, again, not a clear market response to all of that so far.

>> a wildebeast accept years and odd maturity. something like that. thank you, rick. see you later. >> if you bought shares of whole foods at the beginning of this year and held on, you have very big reasons to smile. the supermarket chain has gone from a low of around $7 to about $30 today. a gain year it date of 212%. the runup continuing despite controversy surrounding its ceo. rebecca jarvis is in new york at a brand new whole foods store with its grand opening coming up tomorrow, right? >> reporter: yes, it is. and the success of this company has really been as much about picking the right products as it's been about picking the right location. this one actually happens to be near columbia university, which is similar to a lot of the locations in affluent

neighborhoods, also highly educated neighborhoods, but with everybody watching their wallets these days, whole foods has also successfully marketed itself to the changing customer demand. >> trade down is it happening, so consumers come in, the $50 bottle of wine becomes a $20 bottle of wine, but a nice job of keeping their customers loyal. >> reporter: and the loyalty is paying off. here in new york city, the average whole foods store does about $2 million in sales on an average week. that's about $100 million over the course of the year. compare that to other grossers out there, other grossers are doing about $20 million in sales over the course of that same year. so huge disparity on that. also, analysts say it is really playing out and that the company owes to the leader of the company, that is john mackey, the chairman and ceo. he's come under controversy recently thanks to his health care op-ed, but investors certainly are ignoring that

chatter. they bid up the stock in the last week alone about 5%. and here is some food for thought. rich peterson, standard and poors, tells me not only has whole foods been successful in the category of grosser, but in the s&p 500, it's actually the fifth top performer so far this year. get it, food for thought? >> nice. >> we like it. >> john mackey has come under fire as are beck came was talking about calling for some to call for him to resign. bill patterson is right here and calling for the board to oust mr. mackey. sir, tell us why a network dedicated to shareholder rpgs we've seen incredible move in the stock. why would you want him to be gone? >> john mackey has put the whole foods reputation at risk by conduct, not just around the op-ed on health care, but he has

a record of imprudent partisan activity which is at odds with its customer base. two years ago he went on the internet and tried using a pseudonym degraded the stock of wild oats and pumped up whole foods. conduct not appropriate to a ceo. >> did it hurt the company's earnings? >> the brand name is damaged right now. >> did it hurt the company's earnings? >> it certainly did have an impact. >> did it? i mean did people stop going to whole foods because they didn't like what mr. mackey was doing, is that what you're say something. >> what we're saying is why test it. why put it at risk at a very sensitive moment. >> but if you measure the success of the company based on its returns to shareholders, could you not argue that he has been a success? >> he has done well. but the board of directors has

failed to curb hess political advocacy in a way that's been effective. >> reporter: if i may say, bill, one of the things that i've been hearing throughout this story and the research of it is that the employee satisfaction here is very high, about 89d% of them are on the health care program. and analysts look at the stock and the outperformance and they come back and say john mackey is the heart and soul of this company, without him, you might kiss some of those returns good-bye. >> i get the feeling, mr. patterson, you just don't like john mackey. >> reporter: is it because that you'd rather they have unionized workers? >> it's inappropriate for a ceo to engage in personal political advocacy in a way that offends their customer base. >> what is the matter with the ce off the joining a national debate on a subject that is going to affect his store, his company, and his employees? >> did he so in such a way that precipitated enormous backlash on your internet. 27,000 individuals who said -- >> it also elicited a lot of people who came out and said

they support his views and there are people even on the whole foods website saying that they support mackey's views. whole foods has come out and said rearly these are the ideas, this is the why is of our leader and not necessarily of everybody within the company, but he has support as well as people who disagree with him in this national debate. >> let me ask you this. you sent a letter -- >> his conduct once again is appalling. >> you sent a letter laying out your feelings about all of this, a plea page letter. bottom line, you would like to see him removed. now, have you heard from the doctor on this yet? >> we have not. the shareholder meeting is coming up. we raised this issue last year and 34% of the shareholders assumed our call to remove him as chairman of his board. we think more will do that at this time based on his conduct. >> just because you want unionized workers? >> it's because we want a

company that serves its customer base effectively. >> has nothing to do with unions? >> unions are part of it, workers are part of it, nutrition, reputation is part of it about. >> would you prefer to see unions at whole foods? >> we would. >> so you would prefer to drive up costs everybody though you're a shareholder? >> we prefer that the company take steps to protect its brand name. >> i just wanted to add to the debate that i've talked to the analyst and a lot have said that the employees themselves of local foods, some of them have actually elected to not be union employees here. they did a test of this in wisconsin and the employees overrode that test, decided they would rather not be a union company. >> sounds like you have an uphill climb. >> the critical factor are what are customers going it did and we've seen them react immediately to the partisan activity 29,000 internet users have gone on and joined the

facebook group boycotting local foods. >> you've said basically that his actions have owe femdffende customer base. by what metric do you measure that? 29,000 users is not all that many. >> on facebook especially. >> the share price is up better than 212%. they are growing the franchise and the brand across the country. by what metric do you say that it's been damaged? >> the consumer falls on the measure brand name loyalty showed an immediate reaction by customers to the op-ed piece. indexes were down as much as 50%. >> i guess we have to wait and see if that translate there is to lower sales. >> this is the most imprudent time to be testing customer loyalty. >> maybe this is the most imprudent time to be changing the leader of the company. >> the board has to act here.

>> who would you put in place? who would you like in place some. >> i think that's up to the board. the board of directors needs a successor ship plan and we've asked them to produce one. >> bill patterson of the ctw investment group. thank you for joining us. >> he took a tough one from us. >> he did. thanks. i guess we'll wait and see what theboard does on whole foods there. >> now we're down 15 points. we'll round up theal stars and get you caught up in a moment. still ahead as well, the host looking to become a top entrepreneur. she will join us live. plus one retailer coming out with a program you might cash for cribs. and should the fdi krechlt make it easier for private equity firms to buy troubled banks? (announcer) illness doesn't care where you live...

...or if you're already sick... ...or if you lose your job. your health insurance shouldn't either. so let's fix health care. if everyone's covered, we can make health care as affordable as possible. and the words "pre-existing condition" become a thing of the past... we're america's health insurance companies. supporting bipartisan reform that congress can build on.

the dow may be slightly negati negative, but here's the new highs. bed bath & beyond, cognizant technology, am icht cron technology just moved to the flat side. let get more market reporters. we start out with bob. we had a good auction, second one this a row. what's wrong is this. >> there's a change in the tone in the market. we may be at one of those

inflection points. telecom stock, consumer staples. guess what's happening here today? let's look at telecom. they're all the leadership stocks. i don't want to make too much of it, but the market's down and the telecom group is up you. this is a low beta group, defense sif na defensive name. how about consumer staple stocks? another group that's willinged, look what's up here. all on the up side. what's weak here today? all the high b event ta names. what's led us higher in the last six weeks? sickly cal stocks like industrial names, 3 m and caterpillar? the material names like alcoa? all those stocks are weaker here today. another group, haven't put it up here, but financials are also a great name that have moved up and aren't really doing anything here today. change in tone here i'm

smelling. >> we're still weaker here at nasdaq, down about nine points or so. that's about a half percent, pretty much the range we've been in in the last hour. large cap techs mostly selling off. but it's the discretionary names that are leading us here the at nasdaq as well. bed bath & beyond, new 52 week highs. children's place is higher as is cos it tco. buffalo wild wings got an upgrade today. there's a significant move to the upside by the pharma sector. it follows earnings ahead of expectations. and human genome has been a big mover. a lot of chatter about takeover possibilities on this stock and certainly a lot of options activity around that. expedia down right now, but another two week high earlier

today. let's go brian. >> we've been down all day, but it's been a push and pull of confused market. take a look at the chart. those inventory numbers from the eia came out and it looked like the market would try to go positive. really keep an eye on that $71 mark. it looks like there's a battle over that particular spot. we want to broaden it out to the one week if i can. yesterday's selloff was sharp. traders are split here. some say just some profit taking and the trend is still upward. there are others that say that resistance from 75 down was strong and you have to pay attention to it. the rest of pretty weak. we'll see what happens in terms of breaking that out. i will tell you we do have a stronger dollar, but gold has held up a little bit better than you might expect. maybe that risk aversion trade part of that. >> could be. thank you, brian.

>> here we go. i love this story. it keeps getting better. >> times they are a changing. you soon might be able to hear bob dill will not give you dwrekss home. dylan said on a satellite radio show that he's been asked by car companies to be the voice of their gps navigation system for their cars. >> remember the story when he was in south jersey and before a concert, he had some time to call, so he walked the neighborhood, a local neighborhood there, didn't have any i.d. and police were calling the list saying there's an odd looking old man walking the stree streets. so a couple police stopped him, didn't know who bob dylan was and he didn't have the have the i.d. and chaos ensued. >> poor guy. >> so now he's making light of it and saying he could become the voice of the gps system. i love that.

>> what did you say, the directions are blowing in the wind? >> they'd be blowing in the wind. >> they didn't make him produce an i. di. th that's illegal. >> anyway, great sense of humor. >> all right. she's the host of bravo's top chef, she does commercials, an author and entrepreneur, she's gorgeous, she's beautiful, and they must have slicked her in oil for that ad. look at her. how does pad mcht a do it all? stay tuned. we'll promise to show you more of this video on the other side of the break. i'm racing cross country in this small sidecar, but i've still got room for the internet. with my new netbook from at&t. with its built-in 3g network, it's fast and small, so it goes places other laptops can't. i'm bill kurtis, and i've got plenty of room for the internet. and the nation's fastest 3g network.

gun it, mick. (announcer) sign up today and get a netbook for $199.99 after mail-in rebate. with built-in access to the nation's fastest 3g network. only from at&t.

no direction home. dow industrials down. here's what's moving at this hour. eastman kodak is the biggest percentage winner on the s&p 500. heem dep home depot is leading the dow. garmin leading the nasdaq. >> the dylan line there, how does it feel to be young with no direction home. the no direction home gps. >> that should be his slogan. >> good line. thank you for sending that. just when you thought that author, actress, model, tv host padma couldn't get any busier, she's expanded her empire launching a new jewelry line called, what else, padma. there's jewelry in that photograph somewhere. trust us on that. she's also the host of course of

tv's top chef on our sister channel bravo temperature thank you for joining us. cue the burger king commercial. did you enjoy that burgers as much as you seemed or are you that good an actress? >> well, i hope i'm a good actress, but i did enjoy it. i actually wrote about the karl jr. bacon western burger because it was an iconic part of my owned a leow adoslecn event ce. we would ge always after school. so there is an essay in my last book called in praise of bacon and i talk about a lot of things that have bacon in it and among them is this burger. so the karl jr. people and i got together and in fact i think in the radio ad i'm just reading from my book. >> i interviewed the ceo when they launched this it ad and he

was thrilled with it. >> no kidding. they oil you up, you look so -- >> we shot that commercial in los angeles and it was very warm and, yes, usually they put beautiful moi chur riser with little pearls in them, sort of to bling you up. and i think by the end of the night, that was just like a glow, quote/unquote. it's hot under those lights. >> how do you fit all this into your schedule between top chef, your latest book, and now -- >> we love the title of the book. >> every raises their eyebrow, but -- >> no, i think it's a very clever title. and the jewelry line is stunning, by the way. and it goes back to your roots in india and you take some inspiration from that, but you've also lightened it up a

little bit, as well. >> yeah. i mean, i love beautiful traditional indian jewelry. i have a lot of it, of course, from my mother, from my grandmother and aunts, but i really wanted something a little more modern, a little more wearable and i think that there was a need in the marketplace of women like me who don't have time to come home after work and change before they go out at night. i leave the house at 9:00 and i'm wearing a blazer or a pant suit because i've got meetings. and maybe i change into a cocktail dress. or on the weekends, i go to the grocery store, go shopping with a girlfriend and then wear jeans and i needed jewelry that could serve all the different parts of my life. and i wasn't finding it. i just wanted pretty delicate jewelry that didn't upstage me, that could go with all the different parts of my wardrobe and my personality. and so i started off just creating a micro collection of

pieces for me and then i got a pantene campaign honestly and i didn't want to be somebody who got a chunk of money and this three years like money models just spent it all, so i literally took that money and i started a jewelry company with it because i wanted to be an owner. i wanted to have equity in something. >> an entrepreneur. >> yeah. it's not a licensing deal. it's all -- i own 100% of the company. it's on my back. it either fails or succeeds because of me. and that's scary, but also really exciting. >> let me ask you this. the julia child book, the famous book she wrote 50 years ago on french cooking has become number one following the movie that's out there, but people are discovering it is not the kind of food we eat today, it is not nearly as, quote, healthy as we eat today. but people are still eating this up. could we be -- could this an throw back? could we go back it that style

of cooking, do you think? or what will happen? >> i think cooking for many people like for me is synonymous with family, with nesting, with coziness, with comfort, with emotional well, as well as physical indulgence. and so i don't know how many people are actually doing what the heroin in the book does, which is go through all of the recipes. >> with all the butter in it. >> yeah, but i think it gives you a voir ris tick pleasure and just a real kind of lovely pleasure just to read through the recipes. i think that's one of the reasons that top chef does so well because of course you can't taste the food on my show, but you can, indeed feel how it tastes and you can later it sizzle. and hopefully my work as a food writer helps me as a host and judge on the show because i feel like my job is to bring that you

sense of experience at home. >> so everybody on tv is very self centered, as you know. i love to cook and since we both work for the same company, if you ever need like a guest judge or a guest shopper -- >> come on down. should you come on down. >> she would be good at that. >> i always need people whether it's on the show or in my studio. i have a design studio now where we do jewelry, but we also have this beautiful big kitchen where i test all the recipes. so there's food, there's jewelry, there's girls walking around barefoot. >> the perfect power lunch. >> ja >> everybody has 24 hours in a day, but somehow you fill it nicely. >> i don't sleep much. >> pannithanks for joining us. >> are you okay? >> she's a beautiful woman.

i'm fine. >> she is. i wish she was here in the studio. >> yes, i would. >> what's coming up, bill? >> straight ahead coming up on the half hour mark, which means we'll head to the floor of the new york stock exchange, steve grasso will bail me out and have all the latest market action. >> and you know all about the cash for clunkers bram. how about cash for describes? we'll tell you but toys "r" us trade-in program. plus california is on sale. the state is trying to raise every penny it can. you won't believe some of the things that the governor is auctioning off. we're back. fr he ran off with his secretary! she's 23 years old! - oh, come on. - enough! you get half and you get half. ( chirp ) team three, boathouse? ( chirp ) oh yeah-- his and hers. - ( crowd gasping ) - ( chirp ) van gogh? ( chirp ) even steven. - ( chirp ) mansion. - ( chirp ) good to go. ( grunts ) timber! ( chirp ) boss? what do we do with the shih-tzu? - ( crowd gasps ) - ( chirp ) joint custody.

- phew! - announcer: get work done now. communicate in less than a second with nextel direct connect. only on the now network. , hard of hearing and an people with speech dischities accessac.sprintrelay.com.

here are some of the stories we're following. another sign that housing may be turning the corner. new home sales surging by 9.6% in july. certainly beating expectations. it was the fourth straight month of strong gains. meanwhile durable goods orders jumped by 4.9% in july. that was the biggest gain we've seen on that indicator in two years. and shares of dollar tree on the

rise. let's get more on today's market moves and head back down to the floor. steve, welcome back. good to have you here. you have to help us out because bill is a little -- >> is he having different makeup put on speak has too much blush on. >> just a tad. >> why not such a we are response to such good economic data? >> don't the bulls get a chance to take some time off? >> never, no. >> the bears took the time off last week. the bulls are taking the team off this week. the volume is horrendous. >> the bulls took a whole year off. >> that's true. so all the stocks have done very well. they want to see how without them do they either settle in. so i think that's what you're watching. >> so what are you calling for the close? we're only down modestly, but as bill mentioned, if the housing market has turned, the auction is going well, we heard too

technical analysts today say we may not see a meaningful correction until december. what does the close look like today to you? >> we'll probably stick around 1 1025 in the s&p. 1035, 1037 i believe is the intra day high. so we're in pretty much no man's land. i think we'll hold to the down side and that's a pretty bold call judging from where we've come from. so i think being around 1,000 is pretty good. >> i think jobs numbers what we're all looking at tomorrow and even though housing is great, you can't afford a house without a job. and i think that's what people are focusing this on. >> thanks. see you tomorrow. everybody love as good deal. so how about this? toys "r" us is jumping on the cash for clunkers bad wagon in a wark but it's actually kind of cash for cribs. starting this friday, consumers

can bring in a used baby crib, a car exchange they will receive a 20% off coupon. there is no limit on how many items the customer can trade in. this isn't effort to help rid homes of unsafe or recalled products and encourage consumers from buying used children's products leak car seats and cribs. >> i bet ted's like to help sales, too. >> do you think? wonder if it will be successful. oh, wait, we're already talking about it on national television. >> yes, we are. and you can tune into "squawk box" tomorrow with an interview with their ceo. california wants your cash. the golden state is putting various items up for auction as it looks to close the budget gap. jane wells is in los angeles with more. >> reporter: you know, usually in a garage sale you may net a few hundred bucks. maybe a grand. well, the state of california

wants to net several million dollars as it faces billions in shortfall. you got furniture, tvs, computers, blackberries. and 500 state vehicles including highway patrol cars. many of the items are already listed on ebay and craigslist, so those of you outside california have an opportunity to browse and bail us out. though you'll have to get to sacramento this weekend to pick the stuff up. to boost the value of some of the car, the governor is autographing sun visovs. hoping to leverage his star power and help the state. he actually got the idea from a follower on his twitter account where he has been doing everything he can to promote the event. there are also a lot of unusual items for sale including jewelry the state has confiscated, there's an antique piano, and a dozen dental chairs. they actually did a similar

garage sale in 2004. i've been trying to find out the state raised then but i can't because nobody was paying attention back then because we weren't several billion dollars in the hole. >> thank you so much. see you later. time for our daily look at the most widely followed stories on cnbc.com. am what's clicking. >> we're all about stocks. this is taking a look at four banks. citigroup, bank of america and fannie and freddie, you can argue whether they're a bank or not, but these have accounted for 40% of the morning volume. people are going in, they sort of doubled their price over their 2009 lows, so we've got a little analysis taking a look. >> some have become day trading darlings. >> number two, this is a fun one, the demi/ashton indicator.q we had a guest on on late

yesterday, pointed out what he does is he takes the ratio 6 a country's 40-year-old population to a country's 20-year-old population, and if that ratio is fairly large, he thinks that's a good indicator of a surge in the equity market. ashton apparently saw the segment and we were talking about twitter, ashton twittered our segment on the site, so we've got people pouring in from god knows where. but the hottest one is one typical for our and you had generals. hedge funds are hiring again. trading debts are hiring again. with our crowd, they are just piling some to that story. that's good news. means there might be a recovery going on. >> more jobs there. that's good. all on on cnbc.com. thanks. straight ahead, the fdic will vote today on whether to make it easier for private equity firms to buy troubled banks. should they do that or is it inviting even more risk into an

already risky sector? you're watching cnbc, first in business worldwide. i'm racing cross country in this small sidecar, but i've still got room for the internet. with my new netbook from at&t. with its built-in 3g network, it's fast and small, so it goes places other laptops can't. i'm bill kurtis, and i've got plenty of room for the internet. and the nation's fastest 3g network. gun it, mick. (announcer) sign up today and get a netbook for $199.99 after mail-in rebate. with built-in access to the nation's fastest 3g network. only from at&t.

just about an hour and a half from now, the fdic is expected to ease proposed rules for auctions of distressed banks clearing the way for more private equity buyers. is the move good or does it invite too much risk into an already risky sector? let's hear from james freeman and wayne abernathy.

good to see you. when this vote goes down, in the end what's going to happen is private equity still is going to have to provide more tier one capital if they want to buy distressed banks versus if a bank wants to buy a distressed bank and they're always going to have to commit it to holding on to that bank for ae certain period of time. is it a good idea to have stricker rules on private equity? wayne, what do you think? >> i think it's a good idea to make sure that the people who are investing in banks are committed to the banking industry, that they're committed to their investment. but we candon't want to impose restrictions unrelated to their ability to be good investors. >> so they'll say they have to hold on to the bank and at least 10% here, one capital ratio versus 8%. is that preventive or what does that achieve? >> i think particularly with w.

rald to the hold on to the bank requirement that's probably a between idea. we want to make sure that the people that are coming in to buy the banks are committed to the life of the banks. remember banks are long term investors in their clients, so you want people who invest in banks to be long term investors. >> some are, but a lot of banks do not make good investments. >> well, no i think the banks dis. if you look at most of the subprime loans that were made over the past several years, they were done outside of the banking industry. the banks in-veed in the lovest made by somebody else. >> should there be different sets of rules or not? >> i think certainly you want to get all these assets in to private hands. the fdic has closed 81 banks. we know the government can't manage the assets. this will help private equity get in. but from the f dcht i want c standpoint, remember, when these

assets are sold out into the market to private equity, this isn't the free market at work in terms of these assets being released into the wild. they still come with a taxpayer back stop. a lot of these asset sales have loss sharing agreements, the tax -- >> what's your bottom line, are you advocating tougher rules? >> i think fdic is bargaining hard for taxpayers and they should and they ought to think about tough capital standards, that's the right thing to be thinking about. you look at the mistakes made in the last few years, i think they're asking the right question. >> wayne, is this almost not quite the issue here when we talk about private equity right now they can't owe more than 25.9%, then they become a bank holding company which means the

federal reserve oversees them. they'd like those rules to be eased, really get some control. >> i think there's two things that you need to keep in mind and one is the point just made, which is a commercial bank does have an insurance behind the deposits so the rules are a little different with regard to the commercial banking industry. but on the other hand, you want as many people who are interested to be good bankers, to be bidding on these as sets, to bring more capital into the industry so that the industry can continue to be an engine for economic recovery. >> wouldn't there be enough buyers without private equity? when you think about cologne yam going under and how wilbur ross's team was able it to pick it up for pretty afternoon song, if we dnt didn't have a wilbur ross out there, would fdic have a real pickle on its hands

trying to unload pretty good companies? >> and that is the reason why you want to bring in as many investors as possible. as we all know, the more people who show up for the auction, the more people bidding, the better the prices are and remember in this case the better the prices are for the fdic. >> what about the time period holding? there are those who say they're concern about the holding period. she thinks it may be long enough, but wouldn't mind seeing it steblded. what do you think? what would be a reasonable time period for you? >> i think that three years is not unreasonable. from the taxpayer point of view, you've paid once for the failure of this had bank. you've eaten those losses. if a new buyer is able to get a quick sale and perhaps make some cosmetic changes and then it fails again and the taxpayers pay again in 18 months, that's not a good policy. certainly the fdic, part of this

this is they don't want to be embarrassed by selling an asset and seeing another investor make a huge profit. i don't see that as a big problem. as taxpayer, that doesn't bother me if we get these assets out into private hands and somebody makes money out of it. i think what you do worry about is the bank failing again and coming back to the taxpayers within 2 1/2 years. >> we'll see how the vote goes 3:30 today. thanks, guys. >> don't we know how the votes are going to go? isn't this a done deal? >> they put out a set of proposed rules. now there have been leaks. >> it'll pass. i got it. all right. coming up, big time democratic fund-raiser charged with major

traud. this gentleman did fund-raising for president obama's campaign, former president clinton's campaign. schumer's campaign. who is this person? what is the fallout from the case? and we're also watching the markets for you. still no great response to all the great economic data and the treasury auction today. the dow sharply lower, down four full points. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 i want everything right where i can find it. tdd#: 1-800-345-2550 anything that makes trading easier. tdd#: 1-800-345-2550 i want to be right in the middle of the action-- tdd#: 1-800-345-2550 you know-- i have to see what's going on. tdd#: 1-800-345-2550 and when i pull the trigger... tdd#: 1-800-345-2550 ...i've got to get the best price out there. tdd#: 1-800-345-2550 (announcer) try the new schwab.com tdd#: 1-800-345-2550 for yourself. tdd#: 1-800-345-2550 call 1-888-4schwab tdd#: 1-800-345-2550 or visit schwab.com/trader today. tdd#: 1-800-345-2550 'course a trade doesn't always work out my way. tdd#: 1-800-345-2550 but when it does... tdd#: 1-800-345-2550 ...man... do i love that feeling.

down over 15%. income from continuing operations five cents below estimates after a runup last week. the provider of video solutions reporting well below forecast. and dycom industries down. the provider of contracting services reported a double digit decline in revenue. sue, over to you. a major fund raise foredemocratic presidential campaigns has been released on bail today, but he is under house arrest with a monitoring

device. material prosecutors charging him with bank fraud accusing him of lie to go get a $74 million business loan from citigroup. who is this gentleman? scott joins us with answers. >> he's also now an accused fellow, but ice also a big, big democratic fund raiser. now free on bond, though he had to spend the thit in jail. he is confined to his manhattan apartment with electronic monitoring and no access to computers. that will hammer his fund-raising efforts, but he was one of the top bundlers for president obama's campaign to the tune of half a hill kron dollars. a national finance chair for hillary clinton and john kerry's presidential campaigns and he

donated to chuck schumer, hear read and al franken. born in washington, he serves on board of the iranian political action committee and his company grew out of the joint venture with aig. but he's not in trouble for any of that. instead he face as single count of bank fraud if allegedly trying to get a fraudulent $74 million loan from citibank forging documents, even supplying fake references so when the bank called those references, they were actually calling him. on sunday authorities held him for questioning before he could get on a flight to rome. the next day he repaid the $74 million. nice try. too late. he is due back in court on september 24th. >> any idea what he wanted the money for? >> that's a very good question. the criminal complaint does not say what he was into to go use the money for. his firm was involved in a lot of different investments, some real estate, some others. and clearly there was money that was going from him or members of

his firm to these candidates over time. but there's no indication in this this criminal complaint that that was at all involved in this money. >> thank you, scott. coming up next, the cupcake indicator. and the pizza king is getting back his muscle car. great empty calories. you're watching cnbc, first in business word wide. carol, when you replaced casual friday with nordic tuesday, was it really for fun, or to save money on heat? why? don't you think nordic tuesday is fun? oh no, it's fun... you know, if you are trying to cut costs, fedex can help. we've got express options, fast ground and freight service-- you can save money and keep the heat on. great idea. that is a great idea. well, if nordic tuesday wasn't so much fun. (announcer) we understand. you need to save money. fedex

others by the car of their dreams. during the lexus golden opportunity sales event, you can do both. special lease offers now available on the 2009 is 250.

we've turned positive on the dow jones industrial average by a whole four points. but, heck, the bulls will take it at 9445. >> a lot of companies burn out during a recession it says here, but this is one sector that's on the rise here. we awe new that cupcakes are a hot business right now and guess what? they're also recession proof. cupcake eateries in washington for one are doing very well right now. >> they might even be county cyclical. i think it's the little treats that they're finding, like 2.57 a